follow up on How much insurance should you have / donating PERS equipment - September 26, 2012

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comment on how much insurance you should have [from Sept 6 2012 article]
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Ken –
I agree with your comments and would add a couple of items. First, defense costs are a major component of any claim. At Security America RRG, defense costs are in addition to limits, but not all insurers are that way. If you are purchasing coverage where defense costs erode the limits, then you need to purchase higher limits.
A second point, several of our competitors offer higher aggregates, which is no substitute for a higher per occurrence limits. We have customers who come to use an advise they have $5mm in coverage, when actually they have $1mm per occurrence/$5mm aggregate. That’s not $5mm in coverage available for one claim. The likelihood of having many small claims adding up to $5mm is miniscule. The likelihood of having one very serious claim exceeding $1mm occurrence is much higher. People should look at their policy to determine their actual per occurrence limits.
Bart A. Didden, Director and Executive Claims Manager
SARRG – Security America Risk Retention Group
866-315-3838
http://www.securityamericarrg.com
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comment on donating PERS equipment [from Sept 8, 2012 article]
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Ken,
I am not certain what these companies would mean by "donation." A donation is tyically a gift for which the donor expects nothing in return from the donee.
For a charitable contribution deduction, Section 170(f)(8) of the Internal Revenue Code requires that a monetary contribution of $250 or more must be substantiated by:
A contemporaneous written acknowledgment,
That indicates the amount paid by the taxpayer, and
Whether the organization provided any goods and services in consideration (or in exchange) for the contribution, and if so, a good faith estimate of the value of such goods and services.
I am not certain where any part of a transaction in which a piece of equipment is "donated" in order to induce the other part to enter into a monitoring agreeement, and in which the "donated" equipment wold be used to provide services which would be delivered for compensation would qualify. The $250 floor refers to documentation requirements. If the donor receives something in return from the donee, it is not a donation.
Mitch Reitman
S.I.C. Consulting
www.sicc.us
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Response
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I don't know where someone got the idea of "donating" PERS units, but unless it's to a charitable entity it's not a business model to follow. The Standard Form Contracts offer two PERS options, Sale or Lease. These are the only two models I suggest you consider.
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